Nike, Sexual Harassment and the "Corporate Social Responsibility" Racket: How the company shut down the New York Times

One would think workplace sexual harassment on a vast scale must be a nightmare for an image-conscious brand in the fiercely competitive sportswear sector. Why, then would Nike back in the late-1990s fund and direct a survey of thousands of Indonesian contract-workers that would reveal widespread sexual harassment? For example, 2.5 percent of workers — the vast majority young women recently-arrived from rural villages — reported “unwanted touching” while 8 percent said they had been verbally abused. (Nike’s Indonesian workforce at the time was 70,000.)

There are two interconnected answers: At the time the company was desperate for publicity showing it was addressing the sweatshop issue, and the company was supremely confident it could manage the press coverage. The public relations architect of this unprecedented image transformation, Maria Eitel, a former journalist, had done stints at Microsoft and the George H.W. Bush White House before Nike CEO Phil Knight hired her. She assembled a staff of 95, even as established Nike departments were undergoing layoffs for the first time in the company’s 30 year history.

This was tied to desperation at company headquarters over falling U.S. sales, starting in 1997, after 30 years of explosive growth. Making matters worse, a Nike executive told Timothy Egan of the New York Times in 1998 that girls as young as 12 were speaking out about worker abuse at factories making Nikes.

Small labor rights groups I worked for had helped stir up richly deserved bad publicity for Nike. We worked with journalists on investigative stories, helped organize “street heat” protests by activist groups at shoe stores and brought those cheated and abused workers to speak at colleges, religious institutions and union halls. Cicih Sukaesih, one worker at a Nike plant, toured North America twice (and told the BBC about it last August).

Cicih Sukaesih at Nike protest.

“I go back to 1997 to find the first clearly CSR-related event I can recall – the boycott of Nike –that had a real impact on the company,” says Geoffrey Heal, a Columbia Business School professor. Nike’s 10-K SEC filings show its profits dropped significantly as a result. This shook up many other corporations who realized that if something like that could impact Nike so profoundly it could do the same to them, Heal recalled.

By the middle of 2000, however, the team led by Eitel had launched an effective spin operation against us. One of the myriad tactics used was a “pop-up NGO,” The Global Alliance for Workers and Communities, which was funded with millions from Nike and supported by enablers such as the MacArthur Foundation and the Jesuit-run St. John’s University.

Let’s drop back to Indonesia for a moment before digging into the dirty business of “Corporate Social Responsibility.” Soon after arriving in 1988, I was given an in-depth study by Indonesian doctors who had tracked the health of 200 women workers for two years. Unsurprisingly, 88 percent — working for 86 cents a day — were anemic. Our office interviewed 2,000 workers at 80 factories and found that only half of bosses near Jakarta were paying even this paltry sum. We helped workers develop a strategy that drew attention to Nike, the brand re-writing the rules of global sport by spending hundreds of millions of “sweat-stained” dollars in commercials, athlete, team sponsorships and university “logo-apparel” deals worth as much as $10 million annually.

Beyond the mendacity of doing a study meant exclusively to deflect criticism of your brand – including a bogus, never-implemented “remediation” scheme – was the cynical shut-down of the bogus NGO as soon as Nike had vanquished the anti-sweatshop rabble and sat smugly atop the responsible-business community. The company netted “photo ops” in the White House Rose Garden with key enabler, Bill Clinton and at United Nations HQ, with Kofi Annan. Harvard Business Review published a laughably misleading account of the company’s rise to the top of the ethical-biz ranks. This “premier” business journal didn’t draw the obvious connection between the author of the piece, Simon Zadek, and the Nike money that enabled him to launch AccountAbility, a mercenary, responsibility-for-a-fee consultant shop.

Proof of this stealthy public relations campaign’s efficacy can be found in the daily compilation of press releases from Corporate Social Responsibility (CSR) operatives. Between early- to late-2010, these operatives put out 1,391 press releases. Only 23 dealt with workplace issues; half of the total were reports on awards to businesses for how well they were treating rich country employees. Not one press release dealt with the issue of substandard wages in the apparel sector, even though huge protests over the issue arose in Bangladesh and Cambodia during this period.

Just to reiterate, CSR had an incredible growth spurt because of workers’ exploitation related to outsourcing but the “CSR industry” relied almost exclusively on environmental initiatives to demonstrate some kind of ethical progress. Here was the true genius of Eitel at work – she deftly swapped-in “sustainability” to the CSR lingo, thereby discarding the worker-rights theme she could never win or even address convincingly because of the basic outsourcing paradigm. That is, you put five or six huge, proven supplier companies in competition for the lowest bid on each order; the buyer cannot, then, return to the supplier and demand significant workplace changes to eliminate exploitation.

Rising to the top of the “susty” movement was a piece of cake. The leftish Guardian (UK) even allowed Nike to buy space and only recently took down its company-sponsored “Girl Effect” partner zone page “because it was advertisement feature content that was published as part of a commercial deal and funded by an advertiser. It is Guardian News and Media policy to take down paid-for content at the end of these deals.” Meanwhile, the newspaper recently announced it is doubling-down on this awful practice by allowing full-on corporate and foundation partnerships.

It certainly didn’t help anti-sweatshop campaigners that the major media was heavily skewed toward neoliberalism, if not outright corporate-conservatism. While we earned many damning hard-news stories about wage-cheating and other abuses, the elite “commentariat” was mostly, two-cheers-for-sweatshops.

Niketown protests.

Bob Herbert of the New York Times wrote half-a-dozen scathing pieces about American companies sourcing from some of the most brutal Korean- and Chinese-run sweatshops. He interviewed Cicih and wrote about workers in a moving way.

For that reason, Phil Knight requested a meeting with the Times’ editorial board. He complained bitterly and, though Herbert’s bosses vowed he alone would decide what subjects to write about, the Times columnist never again wrote about U.S. brands’ connections to abusive factory conditions.

The media manipulation was epic – and effective. Even the Oregonian — Nike’s “hometown” newspaper – was shamed into issuing a “public editor” mea culpa after being bamboozled by an “exclusive” that Nike granted them about an annual CSR report. To snag the “exclusive, the newspaper agreed not to interview certain Nike critics.

For years Nike’s CSR people were treated like rock stars at “Triple Bottom Line” and sustainability leadership conferences all over the globe. After all, Nike spends tens of millions of dollars per year on CSR and made hundreds of high-paying CSR jobs de rigueur throughout much of Europe- and U.S.-based contracting-out brands. “CSR has become a major global industry in its own right, and as of 2007 it has been valued [annually] at $31.7 billion,” says the Asia Monitor Resource Center. Consequently, it has become nearly impossible to challenge the misery-wage reality outside of self-congratulatory CSR gatherings.

The grinding outsource paradigm still rules in most low-skill manufacturing. Nobel Laureate and Dean of Stanford’s Business School Michael Spence — and a Nike board member at the time — summed it all up when talking to a group of students in Asia. Businesses, he said, must be “ruthless about out-sourcing.”